March, 2009

  • March 26, 2009
  • I have been writing about communities for many years and it seems like a particularly good topic for the interesting times we live in, to borrow a Chinese phrase. A couple of weeks ago I wrote that this is a perfect time to engage in community building but there is a lot of ambiguity built into that statement so today I will attempt to clarify.

    First kudos to Mary Beth Kemp at Forrester for her insightful report last year on communities and a special shout out to my friends at Communispace for their contributions as well.

    As it turns out, there are really two basic types of community though for most purposes the general press tends to glom it all together. The types are described as either Feedback or Discovery, which also describes the primary jobs of each.

    Feedback is by far the most common kind of community and it is the more loosely constructed of the two. In a feedback community the focus is on what already exists. This might sound obvious but not in relation to its opposite. A feedback community seeks rational opinions from customers about existing products and services so that the company can tweak them.

    In a feedback community members might be surveyed either overtly or through voting and tagging—activities that serve to bubble up good ideas. For example, offers IdeaExchange as a product that automates the process of gathering customer feedback and it has been successful for large companies like Dell Computer and Starbucks.

    The Starbucks story is especially interesting. The company recently introduced a little stopper for the drinking hole in its plastic covers. The stopper prevents coffee from splashing out when the customer is in a motion that does not include drinking. It might not seem like much, but that stopper tells customers that the company is engaged and listening to their ideas and doing something about their requests.

    Marc Benioff and other Salesforce executives have mentioned this in their presentations as a benefit of their technology and rightly so. However, as beneficial as it is, a feedback community is primarily focused on preaching to the choir. It is doubtful that many non-Starbucks customers suddenly began patronizing the café simply because it now has stoppers. Starbuck’s benefit from all this activity is to increase the loyalty of the people already engaged with it and perhaps increase its sales to the converted.

    If a feedback community is about the company the other type, the discovery community is all about the customer. The discovery community is more like what I was talking about a couple of weeks ago. As the name suggests, discovery communities look for what doesn’t exist yet and they are a mechanism for getting customers to fill up a white board and share their ideas and even their emotions.

    Discovery communities need to be a bit more organized if you expect them to yield good results. These communities use a variety of interactive techniques to elicit ideas from customers and most importantly, the best enable free dialogue between members. The dialog part is the most interesting and hardest to pull off. In a feedback community people might simply vote on an idea and the best ideas bubble to the top but in a discovery community an idea needs to mature.

    The classic discovery community idea, one that I have alluded to before, is the Nabisco 100 calorie pack. When Kraft (which owns Nabisco these days) started out with a community of dieters, they were not asking questions that you might expect in a feedback community like, What can we make for you? Or What do you like best about our products? Instead they asked a community of dieters open ended questions about dieting—what’s hard, how do you deal with cravings and things like that.

    The community tossed around a lot of ideas before it came up with the fact that portion control is a big issue and pre-packaged known quantities of snacks would be seen as a good thing. Armed with that basic information, Kraft/Nabisco still had to do some conventional research into things like which products and what quantities were most appealing. The community got the process started in the right direction and eliminated at the outset a lot of dead end experiments.
    It is the discovery process that can best lead to new products and services and it is what I really mean when I advocate community building, especially now, when markets could benefit from having something new to sell. Feedback is important and it always will be and in this economy a feedback community can do a lot to help a vendor keep its customers engaged when they might not otherwise. Both kinds of communities are important but understand the limitations and uses of each before you get started.

    Published: 14 years ago hosted an event in New York on Monday designed to create some separation between itself and the rest of the on-demand world.  Lately Salesforce’s competitors have gone on the attack in an attempt to me-too their way into SaaS prominence by effectively commoditizing some of the more successful aspects of on-demand computing.  CEO Marc Benioff would not sit still and watch and has instead expanded the definition in the last year. 

    Cloud computing is now the hot idea and it takes into account more than simply delivering an application to include interoperating with many other Internet based applications.

    The commoditization aspect is a neat trick and not unexpected.  Some of the gains of on-demand computing such as browser based applications and stateless computing make it easy to build applications that run on the Internet as well as behind the firewall.  Retrofitting conventional client server applications in this way gives vendors the ability to deliver some of the advantages, especially lower costs, to customers.  It also enables them to offer a choice of deployment options that range from conventional behind the firewall applications to traditional facilities management options and standard on-demand.

    In that light there is a lot to like especially if your organization does not want to jump into cloud computing just yet.  Maybe you don’t have an ATM card yet either, but I digress.

    The New York CloudForce event was designed to say that there is a lot more to this than using the Internet as the networking medium for enterprise business applications.  The program started by pointing out some of the accepted benefits of multi-tenant computing such as such as all of the technology acquisition and management services built into cloud computing.  We know what they are and they include up time, security, skilled labor and a lot more.

    To those table stakes, you can add what I have called WebNecessary applications.  By that I mean, applications or combinations of applications that support innovative business processes that either can’t be done at all, or only with great effort, through conventional computing.

    Last fall, Salesforce made a big deal about its integration with Facebook to improve the sales process.  This time, the company turned its attention to the service process and announced integration with twitter, the fastest growing social application on the Web. 

    As I look at it the integration of these products makes great sense in a service environment.  The basic idea is that when people need something they are increasingly motivated to ask their circle of friends and acquaintances for advice.  Twitter is a good bit of functionality for broadcasting your need and as the network continues expanding the likelihood that someone will see your plea and send help only grows.  But to me that’s not the important part.

    Salesforce has implemented technology that captures the help stream when it gets generated and presents it back to the vendor or manufacturer as a mini-service bulletin or candidate for inclusion in a knowledgebase.  If the solution works the vendor can make it part of the standard support offering.

    The idea of customers helping each other with advice like this is not new.  Other service and knowledgebase vendors offer similar capabilities but they tend to be tedious exercises in a more formal writing and approval process. 

    The twitter process leaves some things to be desired because it is limited to 140 characters so people who want to help with more involved support issues will need to resort to forwarding links to longer advice.  But that shouldn’t blur the importance of domesticating an easy to use and very popular social application for the needs of business.  It’s a good idea, a 1.0 idea, and we’ll see where it takes us.

    Back to New York, for sure.

    I got a lot out of the afternoon session I attended — a presentation to the financial analysts (which I am not) about the company and its business prospects.  Like the morning’s review of cloud computing, there was a bit of review but I doubt anyone minded.  Revenues are over a billion bucks, there’s almost that much in the bank, subscribers and customer numbers continue what looks like an inexorable northward march.  It was just the kind of thing to warm the heart of a financial analyst who has covered the Wall Street equivalent of Napoleon’s retreat from Moscow this winter.

    Listening to the discussions you get a sense of the scale of this company’s ambition.  CRM is a big market but enterprise business software is an order of magnitude or two greater.  Moreover, many of the enterprise business applications that will make up that market have not been designed yet or are operating in clumsy spreadsheets.

    Perhaps a natural concern on the minds of many analysts (and competitors) is how one company using a multi-tenant architecture can expect to serve this growing market.  Doesn’t scale become a limiting factor at some point?

    Salesforce anticipated the question and for the first time opened up its kimono enough to provide some insight into its architecture.  Surprisingly, fewer than 50 servers spread across three datacenters runs the whole shebang right now.  And a modest number of (it has to be said) very large database tables — about 20 — holds all the data.  Smart algorithms take care of ensuring your data is delivered in an average of 300 milliseconds with three 9’s reliability.

    Salesforce is still a young company despite its billions and its place in the market and I got a sense of that as I listened to a discussion about its finances.  Benioff said that it can take upwards of eighteen months for an investment in sales talent to provide a return.  And like any company today Salesforce tries to be appropriate in its spending— increasing it when the market is accommodating and reducing it in times like this.

    All in all the day gave me the impression that CRM is and will continue to be important to  Its recent efforts to include social media in the business processes it serves to customers is proof of that.  The company continues to grow and has its eye on larger markets that dovetail into front office computing.  If companies like IBM, Oracle, SAP and Microsoft each represent milestone moments in the history of enterprise computing, and they do, then certainly is rising to that iconic status.  Its place will be secured if it can continue to convince a decreasingly skeptical audience of the value of cloud computing.

    Published: 14 years ago

    Friend Clara Shih of recently published “The Facebook Era” and is participating in April on a panel sponsored by Appirio on Facebook in the sales process.  Register here.  Shih is has a lot of talent and some important experiences already in her young life.  She created Faceforce now Faceconnector for  It was the first business application on Facebook.  Shih is also product line director of AppExchange.  Clara is busy traveling to promote the book and her ideas about selling and Facebook.  Kudos to Clara for her insight and her accomplishments.

    Published: 14 years ago

    Two of the biggest names in CRM had trade shows recently.  Oracle and Microsoft each held customer conventions in the same week but the two could not have been more different.  Microsoft attracted thousands of customers, partners, employees and press to New Orleans for Convergence, one of their big annual events.  In a departure from convention, Oracle held a day-long exposition promoting its front and back office solutions on the Internet.

    Each show was well planned and offered attendees much information, networking opportunities and chances to interact with knowledgeable people from the vendor organizations.  One of the big differences between the two shows is the ultimate costs measured as time and money to put the events on including transportation and lodging and entertainment for anyone attending.  

    I am not going to say that one way was better than another but I will suggest that one approach might be a bit more tuned to the times and customer centric, even if it is in a counter intuitive way.

    While on-line trade shows have been around for a few years, with companies like On24 and Unisfair offering applications to support them, Oracle’s use of this mode really brings it home to CRM.  Consider the advantages.

    If you are trying to rein in costs, and who isn’t these days, a virtual trade show gives you the opportunity to interact with a vendor and to get the information you need without incurring the high costs of travel.  If you are a vendor, you save on renting the hall and transporting people and equipment as well as set up and the travel and entertainment costs of doing a show.  On the other hand, if you think green the idea of not transporting ten thousand or so of your closest friends saves a great deal on a company’s carbon footprint.

    With everyone concerned about costs and carbon, the idea of a virtual tradeshow as one weapon in the marketing arsenal makes even more sense.  The real question, of course, is not whether to convert everything to the virtual mode; it is more about what balance to strive for.  Historically, nearly all shows have been the live variety and because they were so expensive, the marketing calendar was partly built around them.  But in a world where virtual shows become common, I think the absolute number of shows will increase mostly due to the new capabilities. 

    Rather than trying to cram every possible idea and session into the live event it will be easy to build specialized events that can be generated when the need arises.  One of the problems with some of the more esoteric sessions that happen at shows is that the national or international convention is the only time when a vendor might be able to get a critical mass of people and thus make the session worth putting on.  But a Web based session by definition reaches everywhere (with the exception of North Korea and some parts of China, but you know what I mean) and so it could be cost effective to put on any time.

    The net effect of more on-line shows could be greater interaction and greater innovation.  Of course there are other ways to bring a community of interest together but so far communities have been more about capturing customer input and feedback, not about proselytizing.  Perhaps this means that virtual tradeshows will become a kind of community and the technology that supports them a part of community suites.  You don’t know.

    Whatever the outcome, Oracle’s recent use of a virtual trade show is a great example of the kind of innovation possible when some of our entrenched beliefs are challenged by economic realities.  Often the technology has been available and vendors have been working with early adopters to find the right niche.  Then a disruption happens and the niche opens up.

    In the last recession, web conferencing came into its own.  Prior to that, meetings were face-to-face and as an analyst the vast majority of my briefings were in that mode.  Today, it is a rarity when I have a meeting to take a briefing.  This recession could do for trade shows what the last recession did for briefings.

    Of course, the recession is not the only factor and I expect that energy costs will increase significantly once economic activity picks up again.  In that situation, and with a new administration intent on managing carbon output, virtual tradeshows will find another niche.

    The conventional tradeshow is not in danger of disappearing, but a new paradigm has emerged that puts a new twist on it.  People will still visit New Orleans for shows, but virtualization may make it a little easier to get a reservation at Arno’s.

    NOTE: I went to a user group meeting last week in South Beach sponsored by Varolii, a company specializing in outbound customer communications to influence customer behavior.  It was held at the Ritz-Carlton, a short walk from the beach.  Let me just say that the bright sun and guava cheesecake convinced me that the above argument is not, shall we say, airtight.

    Published: 14 years ago CEO Marc Benioff said he was going to be fast today at his company’s customer, press and analyst briefing in New York.  This was, of course, the right approach for an audience of time starved New Yorkers.

    Most of the presentation, a new one written by Marc himself and revised over what they tell me was a couple of weeks, was Benioff’s answer to multi-tenant critics and especially competitors who have been nipping at the heels of on-demand or SaaS computing for the last several years.

    Benioff’s message was that multi-tenant is not a nice thing to have but essential.  You can’t divorce mutlti-tenant from the benefits of low cost, scalable and highly deployable solutions.  For example, some vendors have brought to market solutions that implement some of the gains from on-demand such as stateless computing and browser-based user interfaces.  To make Benioff’s point, the company was happy to dive deep into new service and support ideas that access user acceptance from Facebook and now Twitter.  The ideas might have been exposed at earlier Salesforce events but the detail provided today was new. 

    There was also a short discussion about the architecture, which was illuminating for some and over the top for others.  Bottom line, the architecture is rather efficient, using fewer than 50 servers and ten databases across three data centers around the world. 

    I will have more to write about tomorrow but for now, I have to get back to note taking.

    Published: 14 years ago